Political Class Voodoo Economic Lies And Myths – Myths #3 and #4
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Are there any politicians in America that understand that letting all of our manufacturing jobs migrate to China is bad for our country? Do they understand that the jobs exodus drives down wages and exponentially drives down government revenues, creating higher and higher unemployment and larger and larger debts?
Are there any politicians that want to fix America’s economy and fix America’s budget by ENDING trade with China?
I’d like to know, because that politician will probably get my vote for President in 2012. Who is it?
No. Because that would be economic suicide.
1. China holds a shed load of US debt. If china were to dump all of that into the international system, the result would tip a faltering economy over into the abyss.
2. US manufacturers would be thrown into deep disarray as even those who do not have goods assembled in China rely on Chinese components. Prices would spike, driven higher by componentn shortages (much like the RAM shortage of the late 80s and early 90s) which would depress consumption in the states and thus confound economic problems.
3. US exporters of raw materials would be hit, as China is either the 1st and 2nd biggest importer of most raw materials.
The US would loose a lot of influence it does have with China as a major trading partner. With the gift of better access to a large export market on offer, China would be far less inclined to tolerate or co-operate with the US in many matters, and would doubtless use her UNSC veto much more aggressively to thwart hawkish moves by the US abroad – and could even require her own vassal states reduces ties with the US. States such as Vietnam and the Philippines would be quite susceptible to this pressure.
But then, why let awkward realities trump loud, ill-informed populism?
Structural adjustment is a term used to describe the policy changes implemented by the International Monetary Fund (IMF) and the World Bank (the Bretton Woods Institutions) in developing countries. These policy changes are conditions (Conditionalities) for getting new loans from the IMF or World Bank, or for obtaining lower interest rates on existing loans. Conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. The Structural Adjustment Programs (SAPs) are created with the goal of reducing the borrowing country’s fiscal imbalances. The bank from which a borrowing country receives its loan depends upon the type of necessity. In general, loans from both the World Bank and the IMF are claimed to be designed to promote economic growth, to generate income, and to pay off the debt which the countries have accumulated.
Through conditionalities, Structural Adjustment Programs generally implement “free market” programs and policy. These programs include internal changes (notably privatization and deregulation) as well as external ones, especially the reduction of trade barriers. Countries which fail to enact these programs may be subject to severe fiscal discipline. Critics argue that financial threats to poor countries amount to blackmail; that poor nations have no choice but to comply.
In industrial policy is any government regulation or law that encourages the ongoing operation of, or investment in, a particular industry. It is often related to, or wholly determinant of, investment policy for that industry.
An active intervention in industrial development is the policy of most if not all countries in the world. Even the United States, which prides itself as a “free-trading” nation, has implemented strong tax, tariff, and trade laws to protect itself from “dumping”, the flooding of a market by a competing nation with goods or services below market prices in order to gain an advantage over domestic firms.
A stabilisation policy is a package or set of measures introduced to stabilise a financial system or economy. The term can refer to policies in two distinct sets of circumstances: business cycle stabilization and crisis stabilization. Stabilization can refer to correcting the normal behaviour of the business cycle. In this case the term generally refers to demand management by monetary and fiscal policy to reduce normal fluctuations and output, sometimes referred to as “keeping the economy on an even keel”. The policy changes in these circumstances are usually countercyclical, compensating for the predicted changes in employment and output, to increase short-run and medium run welfare